| A STOCK SPLIT is nothing more than the readjustment of the number of shares and the price to reflect the new number of shares. |
| The current holder of such shares does NOT have any more value after the split than they did before the split. |
| If they were holding 100 shares of XYZ at the price of $50 before the split, they will be holding 200 shares of XYZ at the price of $25 after the split. No change in value. They still have $5,000 of XYZ. |
| There WILL be twice as many shares available for sale that had not been sold at any time after the initial public offering though. Those shares will now be available for half the price they were before, but the overall capital value of the entire share float will be the same. |
| In general, the price will accelerate, upon the announcement of the split, up until about two days after the split occurs, and then the trading volume, and price, will begin to slow down considerably. |
| A Reverse Split is when the number of shares are reduced and the price is increased proportionately. |
| Splits are usually said to be "2 for 1" or shown as a ratio as "2:1". This is to say that after the split there will be 2 shares for every 1 share that existed before the split. |
| There are occasions when the split may be 3:1 or even 4:1. This is usually the case when it is a stock that started with many shares but has now increased in price to such an extent that when reporting the earnings in a ratio of "earnings per share" ratio, it is distorting the market position. |
| When sharing the headline with a company in the same sector, and outperforming the other company's earnings, the first stock with the unusual amount of shares will be reporting a much lower earnings per share and distorting the actual truth when viewing a matrix of sorted earnings. |